Waterfront Toronto facing pivotal moment this week as reshaped board meets for first time

Open this photo in gallery:

Waterfront Toronto faces a pivotal moment this week in its quest to build a digital-driven “smart” community with Google affiliate Sidewalk Labs as its drastically reshaped board meets for the first time – and as a growing number of people involved in the decision that launched the partnership admit that it was pushed ahead with insufficient time and preparation.

Thursday’s board meeting will be the first regular meeting since Ontario fired its slate of Waterfront Toronto directors, including former chair Helen Burstyn and Michael Nobrega – who remains acting chief executive – after Bonnie Lysyk, the province’s Auditor-General, revealed her criticisms in December. Their removal was the latest in a series of personnel changes that have shaken up the team that ushered in the project – dubbed “Quayside” – in the first place. Even the CEO whose vision shaped the project, Will Fleissig, resigned last summer – a move he told The Globe and Mail was a natural step as Quayside moved closer to execution, though several sources said was related to board dissatisfaction with his leadership over the process.

“We are at a key moment in the Quayside project,” as Waterfront Toronto awaits a formal proposal from Sidewalk Labs “within the next few weeks,” new chair Stephen Diamond, a real estate developer who has been on the board since 2016, said in an e-mail ahead of Thursday’s meeting. “... It’s time for Sidewalk to answer the questions that have been asked and submit its plan so that it can be evaluated and determined if it’s in the public interest."

The meeting will also be the first for Ontario’s four newly named directors, who hold nearly a third of the board’s votes.

Provincial Infrastructure Minister Monte McNaughton has said he wants to see stronger oversight of the agency’s decisions, stating in December he was “shocked to learn the board was given one weekend to examine the most important transaction in its history before being asked to approve it.”

In recent weeks, several people close to the decision to approve Sidewalk’s proposal in October, 2017, spoke to The Globe and Mail about that weekend and the days preceding it, expressing concerns that the process was rushed. The Globe granted the people anonymity because they were not authorized to speak publicly.

Waterfront Toronto is mandated by all three levels of government to redevelop a part of Toronto’s underused Lake Ontario shore. In March, 2017, the agency began seeking an “innovation and funding partner” to develop a community on a 12-acre site at the foot of Parliament Street at the eastern edge of the city’s downtown; the following October, it announced that partner for the neighbourhood – Quayside – would be Sidewalk Labs, the New York-based urban-planning subsidiary of Google parent Alphabet Inc.

In the 17 months since, Ms. Lysyk has raised concerns about the project’s timelines and lack of government oversight. And officials at all three levels of government privately and, increasingly, in public, have questioned the process and challenged the proposal’s implications for privacy, data and intellectual property.

According to a timeline prepared by Ms. Lysyk, a Waterfront staff-led committee selected Sidewalk from a three-bid shortlist as the winning Quayside proposal in mid-September, 2017. Waterfront’s investment and real estate committee subsequently suggested changes, the agency said. But that committee, which was also charged with recommending whether the board should proceed with the project, did not receive a final draft agreement for the board to vote on until Oct. 8 – the Sunday of the Thanksgiving long weekend.

The committee did not reach a consensus to recommend the project to the board.

On Thursday, Oct. 12, before the board met for the final vote, an announcement for the deal was scheduled for the following Tuesday, the Auditor-General wrote. At that point, board members only had the opportunity to attend two briefings on the draft agreement, according to the Auditor-General. They received the final draft agreement on Friday, with a vote on proceeding with the partnership scheduled for the following Monday.

Waterfront Toronto chief development officer Meg Davis said that the regularly scheduled October board meeting was pushed ahead by four days to Oct. 16 so that, should the vote pass, the agency could announce the Sidewalk partnership while Prime Minister Justin Trudeau as well as Sidewalk and Alphabet executives were in Toronto the next day.

But this pre-planned announcement, three sources said, put pressure on the board to make a decision about a potentially enormous project that board members were uncomfortable with; two said it prevented them from having adequate time to make an informed decision. A fourth person close to the decision said that the entire process and timing for the board to vote on the deal was “unusual.”

Julie Di Lorenzo, the sole dissenting director of the Oct. 16 vote – who later resigned out of frustration with the project – confirmed some of these details in an interview. “The week prior to the signing of the framework agreement was frenzied – it was unconscionable that an agreement of such importance was rushed," she said.

In the end, the board voted on Oct. 16 to proceed with the Sidewalk partnership.

Regarding the sources’ concerns about the agreement, Ms. Davis said: “No one was compelled to vote in favour, and yet there was only the one dissenting vote.” In a phone interview this week, Mr. Fleissig concurred: “This was a document that was understood to [the board], had been reviewed thoroughly, and every board member had the advantage of direct communication with our in-house attorneys and with the IREC committee to probe, ask questions, ask about different things.”